Arizona Supreme Court limits employment arbitration

Told you arbitration of employment disputes was no panacea.

Arizona Republic (AP) reports: “Ariz. Ruling Limits Employment Arbitration”

The Arizona Supreme Court dealt employers a blow Wednesday, ruling that state law can’t be used to require workers to settle employment disputes through arbitration.

The Supreme Court’s unanimous ruling Wednesday decided the scope of an exemption in state law requiring courts to order arbitration in cases where parties have a valid arbitration agreement.

One party in the case argued the exemption for disputes between employers and employees only applied to employees covered by collective bargaining agreements. The Supreme Court ruled otherwise, saying that the exemption in the state’s 1962 arbitration law is broader, applying to all disputes between employees and employers. . .

The Supreme Court acknowledged that Arizona has a public policy of generally encouraging arbitration but said its ruling was the result of “clear language” of the broad exemption in a state law enacted in 1962. . . Read more

I don’t know how unusual such a provision is, but outside Arizona the broader point is this:

Enforcement of arbitration agreements in employment disputes is at least in part a matter of state law (there is the Federal Arbitration Act, but issues such as unsconscionability are still decided applying state law).

Thus such agreements are subject to 50 states’ legal quirks and whims.

If an objective of using them is simplification and cost-saving, as long as such issues are endlessly being litigated in state courts, the success of that objective is questionable. Too often, an arbitration agreement simply becomes one more complicating factor (of course if your true objective is to make litigation costly and drawn out for employees, having another major procedural issue to wrangle over at the outset is good . . . )

Here’s the full opinion: North Valley Emergency Specialists, L.L.C. v. Hon. Mark R. Santana, No. CV-03-0279-PR (2004)

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